It’s time to open a new bank account, but you don’t know which bank to choose. There are many factors that one must consider when choosing a bank.
In this post we’ll go over those factors and help you make the right decision that’ll lead to your ultimate goal.
At the moment, you probably have immediate needs, like needing an account to deposit your checks in, or a savings account to help maintain savings. However you must consider long term needs as well. Do you plan on relocating? Do you need online banking and/or does your bank of interest offer it.
If you plan on opening a business, can your current bank handle it. There are factors like these that one must consider and research before choosing their long term bank.
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What Factors Customers Need to Know
One of the keys to making sure your money is safe is to never do business with a bank or credit union that doesn’t offer any deposit insurance. These establishments will not carry the FDIC or NCUA symbol. These symbols represent the Federal Deposit Insurance Corporation and the National Credit Union Association, which insures your deposit for up to $250,000 should the institution fail.
If the financial institution were to fail, then these organizations would step in and help fix the damage. Banking without any deposit insurance is very risky. It costs customers nothing to choose a bank that has this insurance and greatly benefits you.
Rates and Fees
- Every bank comes with their own set of rates and fees. You must look into the banks rates and fees and understand them and see if they match your standards and what you are looking for. For example, your Checkings and Savings account can come with different interest rates and annual APY rates. However these shouldn’t be your make or break factor.
- Be sure to pay attention to the small monthly fees or over draft fees. Those fees are the ones that can become an issue if not properly looked into. Another rate to look into is when you take a loan. Even though there are many other options, (out of bank loan companies) that offer lower rates compared to banks, be sure to check their interest rates if you ever plan on getting a loan from your bank.
Types of Banks
- There are different types of banks such as, Big Banks, Small Local Banks, Onlines Banks, and Credit Unions. Though they offer the same service, there are differences in some factors that may be a make or break for you.
- Big Banks: These banks are big name banks such as Chase, Wells Fargo, etc. They have possibly every product/service available for their customers. Their fees are generally on the higher end of the spectrum, but can possibly be waived via direct deposit or a certain amount in checking/savings. Unlike their fees, their savings and CD rates are the opposite and are on the lower side of the spectrum. However these are big national banks with numerous locations so if you prefer banking in person, this is the best choice for you.
- Small/Local Banks: These banks are based on geographical location and won’t be found anywhere else in the nation. The small banks generally have all the products and services necessary for your general banking needs such as debit/credit cards and savings/checking accounts. It may be hard for a small bank to help operate businesses or for the wealthy to store and maintain their money. Their fees are at a reasonable price and can generally be waived. It’s possible to get a a good rate on savings and CD with some advertised deals. Since these are small local banks, they’ll be available at your location, but may not be nationally.
- Credit Unions: Credit Unions are non-profit with a strong sense of community focus. It may seem like a complicated process when opening an account, but it’s much easier than it seems. This type of banking is sufficient for most customers who know what they’re getting into and offer the bare minimum, checking, savings and loans. Fees tend to be low and have many ways to be waived. Rates on Saving and CDs are higher than big banks, but lower than online banking. Even though they seem like they wouldn’t be available nationwide, a lot of them participate in shared branching which can give you access to thousands of free locations nationwide.
- Online Banking: Lastly we have Online Banking. If you don’t use your account regularly, online banking may be the right choice for you. Generally they’re advertised as free checkings and savings which can be a big win for some customers. Fee are usually low or free unless you request certain transactions. Savings and CD rates are the highest you’ll find anywhere else, however to receive these rates, they generally have a certain limit to the amount of money that can be saved. Since its online banking, it’s not possible to find a branch or atm anywhere. However they usually reimburse ATM fees.
Technology and Conveniences
- Bank to bank transfers: Be sure to look for banks that offer free bank to bank transfers. This should come standard on online banks, but can also be found with physical banks as well.
- Remote Deposit: Find a bank that offer the amazing convenience of remote deposits. If you get paid with a physical check, it’s possible to snap a picture of your check through your banking app and deposit it that way.
- ATM Deposits: Whenever it isn’t possible to head into your bank during work hours, it’s always convenient to have ATMs that you can access at any time of the day.
- Bank Hours: Be sure that you’re aware of your banks open hours so that you can match you available hours with their open hours.
- Alerts via Text and Email: It’s hard to always stay on track with your banking information, so receiving texts or emails about the current status or a statement about your account is always convenient.
- Be sure that your money is in safe hands. Make sure that your bank is insured, preferably by the US Government, and understand the limits of your reimbursement.
- If one bank doesn’t satisfy all your needs, it’s possible to open multiple accounts across different banks. Use this to your advantage, but don’t get caught up in multiple fees that can possibly add up.
- At the same time, it is best that you choose a bank that offers the type of accounts that fits your needs. Here are the four you’ll need to consider:
- Checking Account. An account that most people are familiar with, this keeps your bills paid, buys your groceries, and where you’re most likely keeping most of your funds. Checking accounts generally offer a debit card, the ability to write checks, automatic deposit, and the ability to transfer funds between accounts.
- Savings Account. This account is where you might store your emergency funds. The money in this account is meant to stay in this account. Some banks may even try to enforce this by putting a limit on the number of withdrawals you try to make from a savings account. Also, these accounts will tend to have higher interest rates than standard checking accounts.
- Money Market Account. A combination of a checking and savings account, a money market account earns you a higher interest rate with the ability to write checks. However, there is a limit on the number of checks you can write and debit purchases you can make per month.
- Rewards Checking Account. A different kind of checking account, you can earn high interest rates by meeting specific requirements through a rewards checking account. These rewards interest rates tend to cap off at your first $25,000 spent.
In conclusion, be sure to check through this list of factors that one must consider when choosing the right bank for them. Choosing the right bank can give you benefits that you want that other banks cannot offer. It’s almost impossible to find the perfect banks so consider opening multiple accounts.
Just be sure not to get caught up in multiple fees that can add up and cause a dent in your wallet. If you’re interested in researching new banks, go through our posts about Best Bank Bonuses, Best Savings Account Rates, and Best Credit Card Bonuses.Be sure to soak in all this information when choosing the right bank for you!